Tax Hotline can assist you in dealing with IRS Notifications

Getting an envelope in the mail from the IRS strikes fear in the hearts and souls of even the most confident and honest taxpayers. In some cases, the mistakes taxpayers make are easily fixed. 

An IRS computer, in one of the IRS’s ten regional services centers, automatically generates a notice when it spots an inaccuracy. The good news is that this system is cost effective for the IRS because it brings in billions more tax dollars. The bad news for you is that these notices are often ambiguous, intimidating, and (in some cases) wrong!

Receiving your typical notice

Each IRS notice can be identified by its CP number, which can be found in the upper right corner of the first page of the notice. Each notice also has a title that appears in large bold print near the center of the page of the notice. The notice system usually starts with the issuance of a notice of adjustment:

    CP-2501 An Income Verification Notice 
    CP-2000 We’re Proposing Change To Your Return 
    CP-12 Math Error - Overpayment of $1 or more 
    CP-13 We Changed Your Account 
    CP-14 Balance Due, No Math Error 
    CP- 49 Overpaid Tax Applied to Other Taxes You Owe 
    CP- 161 No Math Error, Balance Due 
    CP- 501 Reminder Notice - Balance Due 
    CP- 504 Urgent Notice - Balance Due 
    CP- 515 First Notice - Return Delinquency 
    CP- 518 Final Notice of Overdue Tax Return 
    CP- 523 Notice of Default on Installment Agreement

1. The first notice is either a notice informing you that there is a balance due (you filed but didn’t pay what you owed), there was a math error, or that an adjustment was made to your account. The notice explains the reason(s) for the change plus any penalties that are being assessed. Unfortunately, interest is always charged when a balance is owed.

2. The second notice is CP-501, Reminder Notice - Balance Due.

. The third and final notice is CP-504, Urgent Notice - Balance Due, We Intend to Levy, which is sent by certified mail. This notice informs you that if payment isn’t received within 30 days, the IRS has the right to seize your property and garnish your wages.

Deciphering a notice

Every notice contains the following:

Date of the notice.
Taxpayer Identification number - your Social Security or Employer Identification number (make sure that it’s yours).
The form number you filed -- 1040 is your tax return.
Tax period - the year.
A control number.
Penalties charged.
Interest charged.
Amount owed.
Tax payments you made.

Assessing Assessment Notices

Assessment notices usually inform you of one of the following situations:

You weren’t given credit for all the tax payments that you claim you made. 
You made a math error or used the wrong tax table or form.
You filed a return but neglected to pay what you owed.
You agreed to the results of a tax examination.
You owe a penalty.

Handling Non-Assessment Notices

The IRS usually issues a non-assessment notice to inform you of one of the following situations:

You forgot to sign a return.
You failed to attach a W-2.
You omitted a form or schedule.
You didn’t indicate filing status.

If you receive this notice, simply write across the notice in bold lettering: INFORMATION REQUESTED IS ATTACHED. Then attach the requested information to the notice and return it to the IRS in the envelope provided. After you provide the IRS with the requested information, the matter is usually closed; unless the information submitted conflicts with information previously reported on the return.

Receiving a Delinquent Tax Return Notice

A word of caution: You should treat a delinquent tax return notice as seriously as it sounds. If your tax return is delinquent, you may be contacted by mail, by telephone, or in person. Remember that the IRS has the right to issue a summons commanding you to appear with your tax records and explain why you didn’t file a tax return.

If you don’t reply to a delinquent return notice, the IRS can take one of the following steps:

Refer the case to its Criminal Investigation Unit.
Issue a summons to appear.
Refer you to the Audit Division.
Prepare a "substitute" return.